Consumers may get swiped again

There’s an old saw about being careful what you ask for, because you just might get it. American merchants and consumers are discovering how true that saying is, at least where debit card swipe fees are concerned.

Banks charge merchants fees for each debit card “swipe” made in a store. Merchants lobbied hard to have the fees reduced as part of the Dodd-Frank financial regulation bill approved by Congress. Merchants got what they asked for, and the Federal Reserve – charged with putting many of the changes into practice – settled on swipe fees of between 21 and 24 cents per transaction. That’s down from a high of as much as 44 cents per swipe, but about double the 12 cents per swipe some merchants paid.

The changes went into effect last month, and they have triggered several actions that should have been predictable:

The new 24-cent ceiling on swipe fees has become a floor, a shift that has been particularly hurtful to the country’s smallest merchants.

Banks sought to recapture their lost revenues, estimated at $6.6 billion annually, by simply charging bank card holders a small monthly fee. We all know what happened to that — though some may not recognize other, smaller charges as the replacements for the card fees.

Finally, if merchants have reduced their prices because their fee costs have gone down, it’s news to us.

Now merchants want more, and they’re suing the Fed to get it. Convenience stores, small retailers and grocers have been particularly hurt by the higher fees because so many of their sales are small. Now they want the Fed to push back at the banks again and reduce the fees still further. Given how unhappy many Americans are with banks, they may just get what they want.

We hope not. Banks no doubt will link lower fees for cards to higher fees for other services. Consumers are the folks who ultimately will pick up the tab, just as they have done this time.